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Basic Question 1 of 3

The liquidation value of a company is

A. always less than its going concern value.
B. always more than its going concern value.
C. normally less than its going concern value.
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User Contributed Comments 5

User Comment
thekapila Here is why:
If profitable: Liquidation < going concern as firm is engaging in profitability by putting resources.
If dying: Liquidation > going concern as no point in engaging capital in negative return project.
Roy1 Nice One!
coquin22 understandable
ashish100 "some firms are better dead than alive"
jejemike Interesting.. so a firm can be worth more dead than alive
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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz

Tamara Schultz

Learning Outcome Statements

describe applications of equity valuation;

CFA® 2025 Level II Curriculum, Volume 3, Module 20.